Bruce Enberg: Are you Pent-up?

Friday, 22 August 2014 20:44

Federal Reserve Chair Janet Yellen just introduced a new term into Fed Speak', "pent-up wage deflation". This seems to be an effort to explain away the problem of stagnant wages in the US economy that are not allowing the Fed to meet its 2% inflation goal by blaming it on the "inability or unwillingness of US firms to drastically cut wages" after the Bush collapse in 2008.

This, according to the Fed, is making it possible for companies to now expand employment without raising wages. Ms. Yellen did acknowledge that real wages had been declining for some time prior to the crash (real wages have been declining for 33 years, but who's counting).

Deflation is always the goal of an economic collapse as this further enriches the hoarders of cash since they can buy more assets for 10 cents on the dollar, and drastically increases the burden on anyone who is in debt since they now owe a much bigger percentage of their declining income on devalued property.